Gold and silver make new highs on jobs report

Precious metals trading showed some indecision and a bit of nervousness during the first hour of dealings in New York this morning. Such patterns are not uncommon following fresh record achievements, however. On the other hand, the boost that the greenback received from the economic data that is covered in the paragraphs below was undeniably on traders’ minds and could not be casually dismissed. Spot gold was quoted in the $1,470 to near $1,480 range while silver orbited in and around the $42.25 zone. Platinum and palladium retreated by about $5 each, and were last seen near $1,787 and $770 per troy ounce, respectively.

Friday morning’s market action was dominated by the release of important US economic data sets. The catalyst for Thursday’s pop in precious metals values had been the Labor Department’s finding that US initial jobless claims rose to 412,000 in the latest reporting week. While the figure does not indicate anything more than the level of volatility in the statistics commonly associated with the end of a calendar quarter, currency (dollar) and commodity (name any) speculators took the number and ran with it as if the Fed had all but declared “I give” and had set QE3 in motion as a result of same.

This morning however the statistical picture reflecting the US economy’s progress towards normalization offered a better showing. The New York area’s manufacturing gauge hit a one-year high and rose for a fifth consecutive month in April to reach 21.7 even as polled economists had feared a dip to the 15.5 level earlier. On the other hand, the expectation that consumer prices would rise 0.5% in March fell in line with market analysts’ previously made projections.

Core inflation remained quite subdued, coming in at 0.1% on the month. Since last October however, the 12-month core consumer price gauge has doubled, driven by headline-making spikes in energy and food costs. Should the upward trend not be tamed (read: if the Fed does nothing but declare that these are transitory phenomena) US firms might well react by curtailing hiring or by passing rising material and energy costs on to the end-users. Crude oil has risen 27 percent since mid-February and the excuses that Col. Gaddafi’s antics were responsible for such a price spiral have now worn to a thinness measured in microns.